Debt survey: Consumers unaware of rights

Cape Town – It is a pity most debtors are not aware of laws which determine that a debt prescribes – therefore, becomes null and void – if a creditor has not attemped to collect it for three years, Debt Rescue CEO Neil Roets said on Monday.

He explained that a joint survey conducted by Debt Rescue and Fin24 found that only 40% of respondents actually know about such prescription legislation.

It became clear in the survey that debt has a major impact on the well-being of consumers. Of the more than 6 000 Fin24 users who responded to the survey, 42% admitted that they were continuously worried about their debt situation.

“Of the individuals polled, 70% were male and 30% female and both groups spent about a quarter (24%) of their monthly pay cheques servicing their debt,” said Roets.

Of the total number polled 52% of the respondents said the debt they repaid was for property, while 21% admitted that the repayments were due to unplanned overspending and to meet their daily needs.

“It became clear that South Africans love their credit cards with almost half (49%) confirming that they had a credit card. What was surprising was the fact that only 8% responded that they had more than one credit card,” he said.

About 66% of the respondents indicated that they were positive about debt counselling as a means of getting out of debt.

Although South Africa’s consumers have somewhat reduced their total outstanding debt relative to household income from  77.9% in the first quarter of last year to 76.6% this year, they remain among the most indebted in the world, cautioned Roets.

Consumers in for a rough ride

According to the latest SA Reserve Bank Quarterly Bulletin, the rate at which consumers were able to save money has also decreased significantly.

“Consumers are in for a rough ride if SA’s economy continues to decline with projected growth for the year as a whole hovering at between 0.1% and 0%,” said Roets.

He added that economist Dawie Roodt has said that if what he called “an inevitable downgrade” materialised from the rating agencies, many consumers are going to experience a great deal of pain.

Debt Rescue is seeing double-digit increases in its growth rate, largely because of the growing number of deeply indebted consumers who are seeking relief by going under debt review.

“Debt counselling remains the best way for consumers to manage their debt load by negotiating with creditors and paying off their debt in smaller instalments over a longer period of time,” said Roets.

“None of their assets may be attached by debt collectors while they are under debt review.”

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